Dow industrial average tops 11,000

Traders say the strong close bodes well for the market in '06.

The Dow Jones industrial average closed above the 11,000 mark Monday, a feat it hasn't pulled off since the summer of 2001.

The close at 11,011.90, up 52.59 points, capped a strong start for the stock market in 2006. Stocks have been rising since trading opened the day after New Year's.

The Dow surged 241 points last week alone.

The 11,000-mark has long been considered a milestone for the Dow, which peaked on the technology boom at 11,722.98 in January 2000. It then started falling as technology stocks crashed and the economy soured, and it plunged after the terrorist attacks of Sept. 11, 2001. It hit its post-9-11 low of 7,286.27 on Oct. 9, 2002.

The index is the oldest and most popular stock-market indicator, based on the average price of 30 blue-chip stocks, including Boeing Co., Wal-Mart and the Walt Disney Co.

Traders often say that an up week at the start of the year and a rising January are signs that stocks will head up for the rest of the year.

"We probably can hold on to [the rally]," said Art Hogan, chief investment strategist at Jeffries & Co. "If companies can continue to weather this energy surge, operate in a higher interest-rate environment and create jobs, the market should be able to continue this rise."

Investors last week seemed to turn optimistic when notes released by the Federal Reserve hinted that the Fed would soon end its pattern of interest-rate increases.

Hogan said heightened clarity about the Fed's rate-tightening, stabilizing oil prices and new investment money from 401(k) and pension funds all have contributed to the market's gains in the new year. The market faces key economic data on retail sales and wholesale prices this week, as well as the upcoming fourth-quarter earnings season.

On Monday, Dow stocks GM and JPMorgan Chase garnered a couple of upbeat reports from Goldman Sachs and Prudential Equity Group. GM surged 7.7 percent Monday to close at $22.41. American Express, also a Dow stock, gained 2.5 percent, to close at $53.99.

"It's nice to see the Dow go up," said David Norris, senior vice president for Oaktree Asset Management in Boca Raton.

But he isn't counting on more of the same. Norris says the blue-chip index is still trading in a pattern of gains followed by declines, as it was in late 2005.

Indeed, Monday was a mixed day for the Dow. The index peaked about 1:30 p.m. at 11,020.15, then collapsed, but recovered in the last hour of trading. Volume on the New York Stock Exchange, at 1.8 billion shares, was slightly below the recent average.

Investors got their first whiff of earnings from a profit shortfall at aluminum producer Alcoa Inc. after the close.

The last time the Dow closed above 11,000 was June 7, 2001, when it stood at 11,090.74.

The Dow is coming off a poor performance in 2005, when it declined slightly and the other major market indexes were up marginally.

A number of market analysts predicted that large-company stocks would do well this year, because their prices had been beaten down.

The other major market indexes did well Monday, closing near their highest marks in four years.

The Dow is the only one of the three major stock indexes to come close to its all-time peak reached in the 1998-2000 bull market. The Nasdaq is still only a shadow of the 5,048.62 high reached March 10, 2000 and the S&P peaked at 1,527.46 on March 24 that year.